SEC Moves to Formally Rescind Corporate Climate Disclosure Rules

The U.S. Securities and Exchange Commission (SEC) has submitted a proposed rulemaking to the Office of Information and Regulatory Affairs to formally rescind its climate-related disclosure requirements [1]. This action marks the agency's first official step toward repealing the rules, which were originally adopted in March 2024 but faced immediate and widespread legal challenges [1].

Key takeaways

• The SEC submitted a proposal to rescind climate-related disclosure rules on May 4, 2026 [1].
• The rules, adopted in 2024, were challenged by various groups, including Republican state attorneys general and the Sierra Club [1].
• SEC Chair Paul Atkins stated the rescission aims to restore a "materiality-focused" approach to the commission's regulatory role [2].
• The proposal will be open for a 60-day public comment period following its publication in the Federal Register [2].
• Despite the potential rescission, companies must still navigate existing federal guidance and evolving state and international disclosure laws [1].

From Adoption to Proposed Repeal

The climate disclosure rules were initially adopted in March 2024 following a 3-2 vote and an extensive comment period that included over 14,000 submissions [1]. Almost immediately, the rules became the subject of nine consolidated court petitions filed in federal courts, eventually assigned to the Eighth Circuit Court of Appeals [1]. These challenges came from diverse perspectives: Republican state attorneys general argued the SEC exceeded its authority, while the Sierra Club contended the rules were insufficient [1]. By April 2024, the SEC paused implementation of the rules to address these legal disputes [1].

Following the 2024 election, the composition of the SEC changed, leading the commission to vote to end its legal defense of the rules in March 2025 [1]. Although the SEC attempted to withdraw its defense without a formal rulemaking process, the Eighth Circuit denied this request in September 2025, ordering the agency to either renew its defense or undergo standard notice-and-comment procedures [1]. On May 7, 2026, the SEC confirmed to the court that it would not renew its defense and had begun the formal rescission process [1]. In its proposal, the SEC cited concerns that the rules exceeded its statutory authority and that the associated costs outweighed the potential benefits [1].

Why it matters

The move toward rescission highlights a significant shift in the SEC's regulatory philosophy. SEC Chair Paul Atkins emphasized that the commission’s disclosure obligations should be guided by materiality and avoid dictating corporate behavior [2]. While the federal rules face potential repeal, the landscape for corporate reporting remains complex. Companies must still adhere to traditional financial materiality standards and the SEC's 2010 guidance on climate-related disclosures [1]. Furthermore, firms operating internationally or in specific U.S. states must contend with a fragmented regulatory environment, including the European Union’s Corporate Sustainability Reporting Directive and emerging state-level mandates in California and New York [1]. The formal rescission process is expected to be lengthy and will likely face its own legal challenges once finalized [1].